Not Losing Our Luggage Has Made Airlines $18 Billion Richer

It’s nice to know our bags are less likely to get lost, but these improvements are unlikely to make those baggage fees disappear.

— Marisa Garcia

Share

Tweet

Share

Post

Send

Lost luggage is a nuisance for passengers and expensive to airlines.

But new innovations in technology and processes are making mishandled luggage less likely, and airlines’ books look better as a result.

Over the last seven years, airlines and airports have lost 61.3% fewer bags and saved $18 billion dollars as a result, says a new Baggage Report from aviation information technology firm, SITA.

Out of every 1,000 passengers, only 7.3 bags were mishandled last year. That’s despite a significant increase in passenger enplanments of 33.3% from 2007, with 3.3 billion of us getting on a plane during 2014.

SITA’s CEO Francesco Violante attributes improvements in baggage handling technology and new baggage processing systems for these improvements. “The investment the industry has made in baggage systems automation and processes have made a huge difference to the reliability and speed of baggage delivery, in particular for bags transferring from one flight to another,” he says. “For instance, SITA’s community baggage systems processes more than 2.5 billion messages annually, helping ensure that bag and passenger travel on the same flight.”

From 2015 SITA Baggage Report/SITA

But Violante also cautions the industry that adoption of more automation and better baggage tracking are essential to maintain this good performance. “Given the success already in bringing down the mishandling rate, driving further incremental improvements is going to be that much harder,” he says. “We have already seen the additional pressure in 2014 of record load factors and a 5.4% uplift in the number of passengers nudge the mishandling rate up to 7.30 bags per thousand passengers, from 6.96 the previous year.”

Projected increases in passenger numbers, he indicates, will put pressure on the industry to invest in technology including baggage systems automation. “The industry cannot afford to become complacent,” says Violante. “With IATA forecasting continued passenger growth of around 7% in 2015, all industry partners will need to continue to invest, collaborate and focus on baggage management.”

From 2015 SITA Baggage Report/SITA

Many of the improvements depend on passengers doing their part. Services like at-home baggage tag printing, self-check luggage bins at airports, and luggage tracking apps combine to help airlines and airports handle luggage more efficiently while making passengers feel more empowered in the process.

“Baggage processing and management ranked among airports’ top investment priorities, with investments in self-service processes, such as kiosk and bag-drop technology leading the way,” says Violante. “Over the next three years, 59% of airports said they would invest in major self-service programs, as passengers increasingly express a desire to have more control over their journeys, including their baggage.”

69% of airlines said they would provide passengers with real-time updates on the location of their bags by 2017.

By 2017, nearly two-thirds of airlines expect to offer these services.

Advancements in baggage management technologies will not only improve our passenger experience they could lead to new aircraft designs, suggests IATA’s Head of Airport Operations Management, Andrew Price.

“Any reduction in cabin baggage volumes would make boarding and deplaning faster, the cabin environment safer and perhaps more comfortable. Eventually, you might even see aircraft designs that take advantage of reduced cabin bag needs–imagine overhead windows rather than luggage bins,” he says.

Referencing published figures from IATA, SITA reports that the cost of baggage mishandling per passenger in 2014 was $0.73, which represents 0.34% of the aviation industry’s per passenger operating costs—that’s the costs of administering the business day-to-day. Those passenger operating costs come to an industry average of $216 per passenger, which is food for thought next time we’re fare-shopping.

While the particular costs of administering the business will vary from airline to airline, and the costs of carriage vary from flight to flight, a $216 basis to recoup might explain why all those too-good-to-be-true fares wind up costing us more once all the “extras” are tacked-on, including those dreaded baggage-handling fees.

The Skift Daily newsletter puts you ahead of everyone about the future of travel, subscribe.